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CHEYENNE — Facing opposition from the oil and gas industry, a
legislator who is also a paid lobbyist for a methane farming firm
has withdrawn a bill that would have benefited his company.

Senate File 51, introduced last week by state Sen. Kit Jennings,
R-Casper, would have created a moratorium on the plugging of
coal-bed methane wells in the state in order to promote a
cutting-edge technique that creates natural gas by stimulating
microbes in the coal.

At the same time, Jennings has been lobbying in Washington,
D.C., on behalf of Ciris Energy Inc., one of two firms that are
developing the microbial process in Wyoming.

It’s unclear whether it’s illegal for a Wyoming state legislator
to introduce legislation that would benefit a company he or she
works for.

Jennings himself fervently maintained that he introduced the
bill only to help an industry that may bring a significant amount
of jobs and tax revenue into the state.

He wouldn’t have personally benefited from the legislation, he
said, and if the bill came to the Senate floor he planned to
disclose his connections to Ciris and would have abstained from any
vote.

Even so, Jennings said, he “wrestled” with the decision to bring
the bill forward and only filed it after he couldn’t find another
lawmaker to sponsor it.

A new hope for CBM

Jennings long advocated the microbial conversion process, in
which nutrients are pumped underground into coal beds to feed
naturally occurring microbes that eat the coal and produce natural
gas. Last year, he successfully introduced legislation creating the
system by which microbial conversion is regulated in the state.

Supporters hope the process could provide a new source of
natural gas and unlock millions of cubic feet of gas from old or
abandoned coal-bed methane wells.

Ciris Energy and Luca Technologies, the two companies that are
exploring microbial conversion, are both applying to launch pilot
projects in the Powder River Basin to test whether the process can
succeed on a commercial scale.

And as natural gas prices have plummeted, an increasing number
of CBM wells have stopped production. If they remain open, Jennings
said, they can potentially be used for microbial conversion.

The new bill would have made low-volume “stripper gas” wells
that start production before 2013 exempt from state severance taxes
until 2022, after which they’d be charged 50 percent of the normal
severance tax rate.

“All I’m saying is let’s just slow down a little bit. Let’s give
the market and the technology a couple years, three years, to catch
up,” Jennings said earlier this week. “And if they do, great.
Because we can make a lot of revenue off of gas sales.”

Starting last year, Jennings was hired by Ciris as a consultant
in Washington, D.C., to clear federal impediments to the new
technology. Earlier this month, he filed paperwork as a registered
federal lobbyist for the company. At no time was Jennings an
employee of Ciris, according to Rebecca Watson, an attorney
retained by Ciris, in a letter to the Casper Star-Tribune.

Jennings said he’s been working to convince federal lawmakers of
the potential for microbial conversion.

In addition, Jennings has started to convince the Department of
Interior to allow microbial conversion projects on federal land,
according to Brian Ault, project manager at Ciris. Currently, only
pilot projects are allowed on federal land.

Conflict of interest?

Prior to the consulting job, Jennings received a memo from the
state’s Legislative Service Office stating that Wyoming law doesn’t
specifically prohibit a legislator from lobbying the federal
government.

The LSO memo did not address whether it was a conflict of
interest for a legislator to introduce legislation to benefit a
company he or she is working for.

Attorney General Greg Phillips said this week that he was unsure
about the issue, saying his office would have to research case law
and other sources.

But a number of conservation and public interest groups, as well
as a number of Capitol lobbyists in private, said they were uneasy
with the situation.

“People need to err on the side of protecting the image of
integrity that the Legislature has,” said Dan Neal, executive
director of the Equality State Policy Center. “And so I don’t think
it looks good if somebody seems to be doing something that benefits
a business that pays them directly.”

A number of Capitol lobbyists have also found the bill
distasteful, though none of them wanted to speak about it on the
record for fear of losing their job or other repercussions.

“I think everybody who’s noticed that [bill] raises eyebrows,”
said one lobbyist. “You want to avoid any appearance to folks that
somebody’s on the take, whether that’s going on here or not. You
shouldn’t have to ask the question.”

Energy opposition

However, Jennings withdrew the bill late this week, saying
energy industry officials told him they opposed the plan to offer
severance tax cuts to low-volume gas wells. Energy officials here
are also Wyoming residents, Jennings said, and they said they
didn’t want to shut off a source of tax income at a time when
Wyoming’s revenue projections have dropped — thanks in large part
to declining natural gas prices.

Oil companies, which have enjoyed high crude prices, are
especially lukewarm about natural gas subsidies, according to one
official in the energy industry.

Bruce Hinchey, executive director of the Petroleum Association
of Wyoming, said energy producers opposed a similar plan last year
to cut severance taxes.

“The state and the industry — neither one is in very good shape
when it comes to revenues from oil and gas,” Hinchey said “It
didn’t make a lot of sense with the numbers that they had on that
[Jennings’ bill].”

Hinchey said many companies were also not in support of a
moratorium on plugging unproductive wells.

“I can understand the concept that he’s got for not wanting to
plug it,” Hinchey said. “But someone needs come in and bond for it
to do the plugging, and I didn’t see where that was covered in the
legislation either.”

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